Law Commons^™

Beyond The Inevitable And Inadequate Regulation Of Bankers, Lyman P. Q. Johnson

Lyman P. Q. Johnson

None available.

The Enduring Illegitimacy Of The Poison Pill, Julian Velasco

Julian Velasco

The poison pill is the ultimate defense against a hostile takeover. From management's perspective, it is almost too good to be true. Originally, the poison pill was seen as a way to guard against the worst of hostile takeover tactics. It has been successful; the poison pill has virtually eliminated these tactics from the repertoires of hostile bidders. However, the poison pill is extremely potent, capable of preventing all hostile takeovers, regardless of their underlying merit. Thus, the poison pill eventually became the means to employ a just say no defense of resisting hostile takeovers, regardless of the interests of …

Shareholder Ownership And Primacy, Julian Velasco

Julian Velasco

According to the traditional view, the shareholders own the corporation. Until relatively recently, this view enjoyed general acceptance. Today, however, there seems to be substantial agreement among legal scholars and others in the academy that shareholders do not own corporations. In fact, the claim that shareholders do own corporations often is dismissed as merely a “theory,” a “naked assertion,” or even a “myth.” And yet, outside of the academy, views on the corporation remain quite traditional. Most people - not just the public and the media, but also politicians, and even bureaucrats and the courts - seem to believe that …

Just Do It: An Antidote To The Poison Pill, Julian Velasco

Julian Velasco

The poison pill is the most powerful defense against hostile takeovers. It can render a company takeover-proof, or nearly so. Efforts at developing an antidote have focused largely on shareholder-adopted bylaws, but the legality of such proposals has been questioned by many. In any event, shareholder-adopted bylaws have not been very successful in eliminating poison pills thus far. In order to effect takeovers, hostile bidders cannot rely on the courts or the target company's shareholders; they can rely only on themselves. In this article, I propose a strategy for hostile bidders to counteract the poison pill and to consummate hostile …

Taking Shareholder Rights Seriously, Julian Velasco

Julian Velasco

The great corporate scandals of the recent past and the resulting push for legal reform have revived the role of the shareholder in the corporation as a subject of great debate. Those who favor an expanded role for shareholders in corporate governance tend to focus on developing new legal rights for shareholders, and their critics respond with reasons why such rights are unnecessary and inappropriate. While these issues certainly are worthy of consideration, issues concerning existing shareholder rights are more fundamental. If existing rights are adequate or could be improved, then new rights may not be necessary; but if existing …

How Many Fiduciary Duties Are There In Corporate Law?, Julian Velasco

Julian Velasco

Historically, there were two main fiduciary duties in corporate law, care and loyalty, and only the duty of loyalty was likely to lead to liability. In the 1980s and 1990s, the Delaware Supreme Court breathed life into the duty of care, created a number of intermediate standards of review, elevated the duty of good faith to equal standing with care and loyalty, and announced a unified test for review of breaches of fiduciary duty. The law, which once seemed so straightforward, suddenly became elaborate and complex. In 2006, in the case of Stone v. Ritter, the Delaware Supreme Court rejected …

The Fundamental Rights Of The Shareholder, Julian Velasco

Julian Velasco

Shareholders have many legal rights, but they are not all of equal significance. This article will argue that two rights — the right to elect directors and the right to sell shares — are more important than any others, that these rights should be considered the fundamental rights of the shareholder, and that, as such, they deserve a great deal of respect and protection by law. The history of corporate law has been one of increasing flexibility for directors and decreasing rights for shareholders. Although the law seems to have coalesced around the norm of shareholder primacy, this is not …

Fiduciary Duties And Fiduciary Outs, Julian Velasco

Julian Velasco

Fiduciary outs are virtually ubiquitous in acquisition agreements, but almost unheard of in other contexts. This is because the fiduciary out is an inherently problematic device. Although it is not intended to do so, it almost necessarily transforms an agreement into an option in the hands of one party. Nevertheless, fiduciary outs make sense in the context of acquisition agreements. This is because fiduciary outs are essentially contractual proxies for fiduciary duties. As such, they have the same purpose: to protect shareholders from abuse at the hands of directors. Fiduciary outs do this in the context of acquisition agreements by …

E-Commerce And Electronic Payment System Risks: Lessons From Paypal, Lawrence J. Trautman

Lawrence J. Trautman Sr.

What are the major risks perceived by those engaged in e-commerce and electronic payment systems? What development risks, if they become reality, may cause substantial increases in operating costs or threaten the very survival of the enterprise? This article utilizes the relevant annual report disclosures from eBay (parent of PayPal), along with other eBay and PayPal documents, as a potentially powerful teaching device. Most of the descriptive language to follow is excerpted directly from eBay’s regulatory filings. My additions include weaving these materials into a logical presentation and providing supplemental sources for those who desire a deeper look (usually in …

Why Does Executive Greed Prevail In The United States And Canada But Not In Japan? The Pattern Of Low Ceo Pay And High Worker Welfare In Japanese Corporations, Alberto R. Salazar V.

Alberto R. Salazar V.

According to a list of the 200 most highly-paid chief executives at the largest U.S. public companies in 2013, Oracle’s Lawrence J. Ellison remained the best paid CEO and earned $96.2 million as total annual compensation last year. He has received $1.8 billion over the past 20 years. The lowest paid on the same list is General Motors’ D. F. Akerson who earned $11.1 million. The average national pay for a non-supervisory US worker was $51,200 last year and a CEO made 354 times more than an average worker in 2012. Hunter Harrison, Canadian Pacific Railway Ltd., was the best …

Systemic Harms And Shareholder Value, Jeffrey N. Gordon

Jeffrey N Gordon

The financial crisis has demonstrated serious flaws in the corporate governance of systemically important financial firms. In particular, the Shareholder Value norm, which has guided corporate governance reform for a generation, proves to be a faulty guide for managerial action in systemically important firms. This is not only because the failure of such firms will have spillovers that defy the cost-internalization of the tort system but also because these spillovers will harm their own majoritarian shareholders. The interests of diversified shareholders fundamentally diverge from the interests of managers and other controllers because the failure of a systemically important financial firm …

Present At The Creation: Reflections On The Early Years Of The National Association Of Corporate Directors, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Effective corporate governance is critical to the productive operation of the global economy and preservation of our way of life. Excellent governance execution is also required to achieve economic growth and robust job creation in any country. In the United States, the premier director membership organization is the National Association of Corporate Directors (NACD). Now over 36 years old, NACD plays a major role in fostering excellence in corporate governance in the United States and beyond. Over the past thirty-six years NACD has grown from a mere realization of the importance of corporate governance to become the only national membership …

The United States, Lawrence A. Hamermesh

Lawrence A. Hamermesh

No abstract provided.

Sovereign Investing And Corporate Governance: Evidence And Policy, Paul Rose

Paul Rose

Discussions of corporate governance often focus solely on the attractiveness of firms to investors, but it is also true that firms seek out preferred investors. What, then, are the characteristics of an attractive investor? With nearly $6 trillion in assets, sovereign wealth funds (SWFs) are increasingly important players in equity markets in the United States and abroad, and possess characteristics that firms prize: deep pockets, long-term (and for some, theoretically infinite) investment horizons, and potential network benefits that many other shareholders cannot offer. However, despite their economic power, their reach, and their general desirability as investors, SWFs are almost entirely …

Recent Developments In Delaware Corporate Law, Lawrence Hamermesh, Faiza Saeed, Mark Gentile

Lawrence A. Hamermesh

No abstract provided.

The Law Of Corporate Purpose, David Yosifon

David G. Yosifon

Delaware corporate law requires corporate directors to manage firms for the benefit of shareholders, and not for any other constituency. Delaware jurists have been clear about this in their case law, and they are not coy about it in extra-judicial settings, such as speeches directed at law students and practicing members of the corporate bar. Nevertheless, the reader of leading corporate law scholarship is continually exposed to the scholarly assertion that the law is ambiguous or ambivalent on this point, or even that case law affirmatively empowers directors to pursue non-shareholder interests. It is shocking, and troubling, for corporate law …

A Fresh Look At Director "Independence": Mutual Fund Fee Litigation And Gartenberg At Twenty-Five, Lyman P.Q. Johnson

Lyman P. Q. Johnson

This article contrasts how a robust conception of director independence plays a central role in the corporate law world while, in the mutual fund industry, independence is a shrunken conception playing only a marginal role. Over the last twenty-five years, director independence in corporate law has gained wide acceptance as being desirable and it has become a critical component of fiduciary duty analysis. Within the mutual fund industry, however, independence remains fiercely contested. The more obvious battle over independence has occurred in response to the Securities and Exchange Commission's ("SEC's") rulemaking effort to alter the standard for granting certain regulatory …

Corporate Takeovers And Corporate Law: Who's In Control?, Lyman P.Q. Johnson, David K. Millon

Lyman P. Q. Johnson

No abstract provided.

Faith And Faithfulness In Corporate Theory, Lyman P.Q. Johnson

Lyman P. Q. Johnson

No abstract provided.

How To Sufficiently Consider Efficiency, Competition, And Capital Formation In The Wake Of Business Roundtable, Ian D. Ghrist

Ian D. Ghrist

This article applies ideas from the Law and Economics movement to the D.C. Circuit's 2011 decision in Business Roundtable v. Securities and Exchange Commission. The article lays out a framework for cost-benefit analysis that, if followed, should increase new rules' chances of surviving the heightened arbitrary and capricious review standard imposed by the National Securities Markets Improvement Act of 1996.

The Dodd-Frank Act comprises the broadest financial reforms since the 1930s. The Act, however, makes surprisingly few important decisions and instead, almost exclusively defers to agency rulemaking or the creation of a new organization. The Act mandates the promulgation of …

The Merits Of Cooperative Corporate Governance In The Digital Age, Meredith-Anne Kurz

Meredith-Anne Kurz

No abstract provided.